Fabric manufacturer Raymond's stock is up 12 percent in Friday's trade on account of its second-quarter numbers. On Thursday, Raymond reported a strong set of numbers for the Q2FY19. The company's revenue was up 16 percent at Rs 1,847crore, while gross margin improved by 200 basis points (bps) at 55 percent against 53 percent on year-on-year (YoY) basis.

One basis point is a hundredth of a percentage point.

At the EBITDA level, margins saw some pressure compared to gross margin improvement due to an increase in wool prices and higher advertisement spends. Profit after tax (PAT) was up 50 percent at Rs 63 crore against Rs 42 crore YoY (exceptional items).

The company expects that the same growth momentum to continue in second half of the year as well, said Sanjay Bahl, group CFO, Raymond.

"Rupee depreciation and product mix led to margin improvement," he said.

FMCG business is doing well as it resisted Rs 98 crore of revenues with 5 percent EBITDA margin, Bahl said, adding that two FMCG associate companies will be integrated into one by the Q3FY19 end.

Bahl stands strong on paring down debt by FY20 as capital expenditure cycle comes to an end by then.

Revenue growth was largely driven by segments including branded apparel, auto components tools and garmenting. The branded textile business grew by 15 percent at Rs 884 crore. Driven by volumes, branded apparel up 15 percent on account of strong performance in multi-brand outlets (MBO).

Garmenting business also reported strong growth of 19 percent led by exports growth in the US. Also, rupee depreciation played an important role to drive margin expansion by 1.5 percent. Other segments like tools and hardware were up 15 percent and auto component reported growth of 21 percent.

On real estate project, Raymond is currently in the process of seeking requisite approvals from the authorities pertaining to the commencement of the project, the company said.

The company owns premium land bank of approximately 125 acres in Thane. The approximate value of Thane property is around Rs 3,125 crore. In Q4FY18, the Raymond board approved the development of 20 acres of land for residential purpose in next five to six years.

Moving on to store expansion, the company has managed to open 38 mini The Raymond Shops (TRS) in Q2FY19, totalling it to 139 stores as of September. All the newly opened stores and upcoming stores are franchises based on low-cost capital expenditure model.

The company has 1,233 domestic retail stores in India. Also, Raymond is close to signing an agreement with 40 franchise stores for ethnic wear.

First Published:Oct 26, 2018 4:54 PM IST